Life expectancy in India has more than doubled since Independence — from around 32 years in the late 1940s to 70 years or so today. Many countries have done even better, but this is still a historical achievement.
Over the same period, the fertility rate has crashed from about six children per woman to just two, liberating women from the shackles of repeated child-bearing and child care.
All this is good news, but it also creates a new challenge — the ageing of the population.
The share of the elderly (persons aged 60 years and above) in India’s population, close to 9% in 2011, is growing fast and may reach 18% by 2036 according to the National Commission on Population.
If India is to ensure a decent quality of life for the elderly in the near future, planning and providing for it must begin today.
Depression, Elders and the Tamil Nādu Case Study
Recent work on mental health among the elderly in India sheds new light on their dire predicament. Evidence on depression from a collaborative survey of the Abdul Latif Jameel Poverty Action Lab (J-PAL) and the Government of Tamil Nadu is particularly telling.
Among persons aged 60 and above, 30% to 50% (depending on gender and age group) had symptoms that make them likely to be depressed.
The proportion with depression symptoms is much higher for women than men and rises sharply with age.
In most cases, depression remains undiagnosed and untreated.
As one might expect, depression is strongly correlated with poverty and poor health, but also with loneliness.
Among the elderly living alone, in the Tamil Nadu sample, 74% had symptoms that would classify them as likely to be mildly depressed or worse on the short-form Geriatric Depression Scale.
A large majority of elderly persons living alone are women, mainly widows.
The hardships of old age are not related to poverty alone, but some cash often helps. Cash can certainly help to cope with many health issues, and sometimes to avoid loneliness as well.
The first step towards a dignified life for the elderly is to protect them from destitution and all the deprivations that may come with it. That is why old-age pensions are a vital part of social security systems around the world.
India has important schemes of non-contributory pensions for the elderly, widowed women and disabled persons under the National Social Assistance Programme (NSAP), administered by the Ministry of Rural Development.
Alas, eligibility for NSAP is restricted to “below poverty line” (BPL) families, based on outdated and unreliable BPL lists, some of them are 20 years old.
Further, the central contribution to old-age pensions under NSAP has stagnated at a tiny ₹200 per month since 2006, with a slightly higher but still paltry amount (₹300 per month) for widows.
Many States have enhanced the coverage and/or amount of social-security pensions beyond NSAP norms using their own funds and schemes.
Some have even achieved “near-universal” (say 75%-80%) coverage of widows and elderly persons.
That is now the norm, for instance, in all the southern States except Tamil Nadu — an odd exception since Tamil Nadu has been a pioneer in the field of social security.
Errors in Listing
“Targeting” social benefits is always difficult. Restricting them to BPL families has not worked well: there are huge exclusion errors in the BPL lists.
When it comes to old-age pensions, targeting is not a good idea in any case.
For one thing, targeting tends to be based on household rather than individual indicators.
A widow or elderly person, however, may experience major deprivations even in a relatively well-off household.
A pension can help them to avoid extreme dependence on relatives who may or may not take good care of them, and it may even lead relatives to be more considerate.
For another, targeting tends to involve complicated formalities such as the submission of BPL certificates and other documents. That has certainly been the experience with NSAP pensions.
The formalities can be particularly forbidding for elderly persons with low incomes or little education, who are in greatest need of a pension.
In the Tamil Nadu sample, eligible persons who had been left out of pension schemes were found to be much poorer than the pension recipients (by more than just the pension).
Moreover, even when lists of left-out, likely-eligible persons were submitted to the local administration, very few were approved for a pension, confirming that they face resilient barriers in the current scheme of things.
The problem is generally not a lack of effort or goodwill on the part of the government officials.
Rather, many have absorbed the idea that their job is to save the government money by making sure that no ineligible person qualifies by mistake.
In Tamil Nadu this often means, for example, that if the applicant has an able-bodied son in the city, they may be disqualified, regardless of whether they get any support from their son.
In their quest to avoid inclusion errors, many officials are less concerned about exclusion errors.
A better approach is to consider all widows and elderly or disabled persons as eligible, subject to simple and transparent “exclusion criteria”.
Eligibility can even be self-declared, with the burden of time-bound verification being placed on the local administration or gram panchayat.
Some cheating may happen, but it is unlikely that many privileged households will risk trouble for the sake of a small monthly pension.
And it is much preferable to accommodate some inclusion errors than to perpetuate the massive exclusion errors we are seeing today in targeted pension schemes.
Widening the net
The proposed move from targeted to near-universal pensions is not particularly new. As mentioned earlier, it has already happened in several States.
Of course, it requires larger pension budgets, but additional expenditure is easy to justify.
India’s social assistance schemes have low budgets and make a big difference to large numbers of people (about 40 million under NSAP). They are well worth expanding.
An example may help.
In Tamil Nadu, social security pensions (typically ₹1,000 per month) are targeted and cover about a third of all elderly persons and widowed women, at a cost of around ₹4,000 crore per year.
If, instead, 20% were to be excluded and the rest eligible by default, the cost would rise to ₹10,000 crore per year.
That would be a modest price to pay to ensure a modicum of economic security in old age to everyone. It would be a fraction of the ₹40,000 crore Tamil Nadu is expected to spend this year on pensions and retirement benefits for government employees – barely 1% of the population.
If the transition cannot be made in one go, there is a strong case for starting with women (the widowed or the elderly), who often face special disadvantages. This would also be a step towards the fulfilment of the Tamil Nadu government’s promise of a “home grant” of ₹1,000 per month for women.
The southern States are relatively well-off, but even some of India’s poorer States (such as Odisha and Rajasthan) have near-universal social security pensions.
It would be much easier for all States to do the same if the central government were to revamp the NSAP.
The NSAP budget this year is just ₹9,652 crore — more or less the same as 10 years ago in money terms, and much lower in real terms. This is not even 0.05% of India’s GDP!
Social security pensions, of course, are just the first step towards a dignified life for the elderly.
They also need other support and facilities such as health care, disability aids, assistance with daily tasks, recreation opportunities and a good social life. This is a critical area of research, policy and action for the near future.
Published in The Hindu, Written By Jean Drèze is Visiting Professor at the Department of Economics, Ranchi University. Esther Duflo, a Nobel Laureate (2019), is Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.